Who is getting the real crap end of this housing market?

[EscapeCalifornia]

Originally Posted by sonarrat

That's what has always happened to anyone who buys a brand-new house or condo at retail, even when the market was healthy. Show me anyone who has ever turned a profit on a turnkey property from a builder within 5 years. Short sales have always been rare, but it's not because there weren't folks upside down.

Lots of people who bought existing construction in the last few years are upside down now too.

[Havasu]

Prices are falling fast here in Lake Havasu. All of the people from SoCal are no longer buying houses here in my Home town

[Humanoid]

This cycle only happens about every ten years. If those waiting on the fence to buy don't catch the downturn this cycle it might be necessary to wait for the next one unless you want to buy at higher prices during a 'Good Market.'

This isn't accurate at all. At least over the last 50 years there have been 3 noticeable booms in California real estate. One in the mid-70's, one in the late 80's and of course one in the first half of the 2000's. During most years housing in California was reasonably priced, it is only a few years near the peak of these booms where housing got expensive. The booms in the 70's and the 80's were much more mild than the current boom though. People that bought at the peaks of these were able to recover in a reasonable amount of time. Anyhow so in the last 50 years only around 10 have seen real estate values above normal ranges and really only around 4 where they were extreme and could ruin you if you purchased during that time.

[MtnSurfer]

Well, I was referring to a siginicant 'down' market not a boom. This represents a good opportunity for buyers/investors which does not come around very often in our typical RE cycle. You may argue the 'frequency' by which it occurs but you can't argue the unique opportunity it represents during such a phase.

Whether or not California RE is normally 'reasonably priced' is questionable at best and very 'relative' depending on where in CA you are referring to. In the more popular coastal areas with good job markets homes have been rather steeply priced when compared to the rest of the nation. This is common knowledge during any phase of the market cycle. Unless of course you are referring to the 'other' California that only a few know about. In Colorado's two largest cities Denver and Colorado Springs for example home ownership is much more attainable for most people.

So for average joe worker this is a good time to get into the CA market if wanting to find a good value. Of course even this 'low period' may not be 'affordable' enough for many depending again on location.

Now out in Bakersfield, Modesto or Crescent City for example things may be more affordable most of the time. But those are different markets than many are looking at when considering the affordability of CA RE.

[Humanoid]

This represents a good opportunity for buyers/investors which does not come around very often in our typical RE cycle. You may argue the 'frequency' by which it occurs but you can't argue the unique opportunity it represents during such a phase.

I fail to see how buying a house while prices are predicted to decline much more is a
"good opportunity". But yes the opportunity is unique, during no other period could you have so vastly overpaid for real estate. What an opportunity!

Whether or not California RE is normally 'reasonably priced' is questionable at best and very 'relative' depending on where in CA you are referring to.

No...its just a matter of looking at the data. Since the 50's real estate has been priced according to the fundamentals of the area around 80% of the time.
The baseline is NOT the prices seen during the peak of a real estate boom, but rather the prices seen during normal real estate markets (Booms are NOT normal markets).

In the more popular coastal areas with good job markets homes have been rather steeply priced when compared to the rest of the nation.

And they will continue to be rather steeply priced when compared to the rest of the nation. So what?

So for average joe worker this is a good time to get into the CA market if wanting to find a good value.

Most areas are still well inflated over historic norms so in what sense are they going to find a good value? They will need to wait another 1-3 years to find prices more inline with historic norms.

Anyhow, the prices seen during the peak of the bubble were not normal. People have this odd way of thinking of the prices during the bubble as the "baseline", instead of the prices before the bubble. If you use peak prices as the baseline then of course the current prices are a "good deal", but in comparison to pre-bubble prices (those in the late 1990's) the prices are still rather high.